Why getting a decent super balance can be hard for women
In this article, we look at why women typically retire with less super savings than men and what they can do to help boost their super and overcome the gap.
Data from ASFA1reveals that women are reaching retirement age with about 20% less in super than men. Women’s average super balances at retirement are $157,050 compared with men at $270,710. According to the ABS1, women earned around 85% of what men earn, on average. It’s something the industry and the public has rightly focused on over the last few years.
If you are a woman, or if you know a woman who’s close to retirement, it’s a good idea to be familiar with the risk factors. When you’re aware of what can keep a woman’s super balance down, you may be able to plan to avoid these hurdles. In its report, Per Capita2, an independent think tank, outlines some of the major contributors. And this time, the numbers are backed up by comments from thousands of women all around Australia.
- Part time and casual work / self-employment
Women are more likely to take on part time or casual work during their lifetime, especially if they have kids.
- Complexity and change in the super system
Women who are close to retirement today may have seen several different superannuation systems through their lifetime. Also, they have typically spent less time in the workforce (than men) and therefore received less super over their working lives. Remember that compulsory super (the Superannuation Guarantee) didn’t come in until the early ‘90s, which has not been enough time for some women to have received adequate super.
- Gender pay gap
According to the Workplace Gender Equality Agency, the gender pay gap is still above 20%. That means women get lower employer contributions, and don’t have as much to salary sacrifice.
- No super at low pay levels
Women in casual work may not earn enough each month (at least $450) to get paid super.
- Carer responsibilities
Women are still more likely than men to take responsibility for the care of disabled, sick or elderly relatives.
- Living longer
Put simply, a woman’s super has to last longer because stats suggest she’ll live longer.
- Poor financial literacy
Many women don’t have the background skills they need to make informed decisions about their superannuation, or about retirement in general.
- Childcare costs/availability
Because of poor childcare availability and pricing, many women are dissuaded from going back to work full time after having children. And a longer break from the workforce means a longer break from getting those super contributions.
You can read the full report at percapita.org.au/research/not-so-super
You can take action to boost your spouse’s super by making a spouse contribution. These are contributions made into your spouse’s super account to help build their super and are especially helpful when taking a career break (e.g. caring for children). A further benefit of making contributions is that a tax offset may be available if the spouse is low income earning. To learn more about spouse contributions or what you can do you boost your super, book in for a chat with one of our financial planners, it’s usually at no extra cost to you. Find out more here.
Learn out more about spouse contributions with VicSuper
Find out more about growing your super with VicSuper
This advice has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice in light of your individual circumstances before acting on the advice. You should also obtain and consider a copy of the relevant Product Disclosure Statement available at www.vicsuper.com.au before making any decisions. VicSuper Pty Ltd ABN 69 087 619 412, AFSL 237333, Trustee of Victorian Superannuation Fund ABN 85 977 964 496.
1 Superannuation account balances by age and gender.
2ASFA Research and Resource Centre. October 2017